Blocked by Colombia’s courts, President Gustavo Petro remains defiant to keep the 19% VAT on gambling. Gambling taxes are critical to balancing the President’s budget which underpins his 2026 re-election campaign reports SBC Noticias’ Damian Martinez.
In Colombia, it appears that President Gustavo Petro will seek an alternative route to maintain taxes on online gambling, regardless of recent legislative denials.
Last Friday, Finance Minister Germán Ávila told local media that he had been instructed to re-draft Colombia’s tax plan on games of chance, a mandate required by President Petro to balance the books on COL$550trn (circa €125bn).
The order follows the Constitutional Court’s ‘provisional suspension’ of the government’s ‘emergency economic decree’, which amongst its measures sought to impose a 19% VAT on online gambling calculated on gross gaming revenue (GGR).
The decree was born of fiscal impatience by the Humana government, due to Congress rebuffing Petro’s sweeping demand of tax increases in December. In response Petro invoked emergency powers to bridge a sizeable gap in the 2026 budget.
The 19% VAT has been imposed on Colombian online gambling licences since February 2025, authorised as an executive action of the Humana government to help raise direct funds for the humanitarian and security crisis in the Catatumbo region.
In September Petro called for VAT on online games of chance to be indefinitely imposed for domestic and foreign operators. This was expected to generate between COP 26trn to COP 30trn (€6-to-€7bn) in additional revenues for a new National budget.
However, a consultation saw the Constitutional Court side with Congress and suspend the decree pending a substantive review of its ‘constitutional validity’. In a historic determination, the Court expressed procedural doubts on whether a president could apply an ‘executive order’ to sign-off a budget.
As such the mechanism of an executive order was judged to be a legislative override that can only be used at a time of national crises or for exceptional circumstances.
Humana do-or-die budget
The timing is sensitive. On 31 May Colombia will join Costa Rica, Brazil, Peru and Haiti in holding presidential elections, making 2026 an unusually crowded electoral year for South American politics.
For Petro, leading the left-wing progressive Pacto Histórico (often referred to domestically as the Humana government), the contest is close to existential.
His first term has been framed as an effort to overhaul Colombia’s welfare state — expanding healthcare access, social transfers and public investment. Delivering a record spending budget is not merely a fiscal exercise but the fulfilment of his political mandate.
Taxes have been the instrument of choice for the Humana government. The administration has imposed new levies on digital services, introduced a 15% corporate floor, increased capital-gains taxation and applied charges to plastics and oil production.
Like President Inácio Lula da Silva in Brazil, Petro has argued that corporations and billionaires must shoulder a greater share of the burden. Gambling, lucrative and lightly defended, fits neatly within that philosophy.
The proposed VAT on online betting was therefore emblematic: a targeted measure capable of plugging tens of trillions of pesos into the budget while signalling ideological consistency.
Its suspension complicates that arithmetic. Reintroducing it through ordinary legislative channels or by restructuring the tax base — now appears the more likely course.
Politically, Petro’s opposition remains unsettled. Polling before Christmas suggested a fragmented electorate and no clear challenger to Humana.
Three figures emerged as frontrunners: Iván Cepeda, an internal challenger of Pacto Histórico, and Sergio Fajardo of the centrist Dignity Party, each polling at 24%.
Furthermore, polls showed Abelardo de la Espriella, the conservative candidate viewed as ‘Colombia’s Bolsonaro’, at 17%.
All polls taken showed a large share of undecided voters, hinting at a volatile and likely divisive campaign season to challenge Petro.
Licences in tax limbo
Colombia’s gambling sector continues to openly challenge President Petro’s tax burdens, as 2025 delivered the industry’s first recorded contraction since its inception in 2016.
Evert Montero Cárdenas, President of Coljuegos, the industry trade association, has been among the most vocal critics.
“It’s an unsustainable burden from a financial standpoint,” he stressed. “Operators have been forced to grant bonuses to absorb the VAT impact and avoid passing it on to users.”
According to Montero, the financial strain is already visible in public finances. Monthly transfers from the gambling sector to Colombia’s healthcare system have fallen from COP 40bn (€9m) to COP 27bn (€6.1m), a reduction of COP 13bn per month.
The actions of the Humana government have simply placed a new economic burden on Colombia’s welfare state, the principal system that was meant to benefit from the legalisation of online gambling in 2016.